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July 11, 2007

Cable Bundles Trump Telcos: J.D. Power

Operators are #1 in all six U.S. regions surveyed by J.D. Power and Associates — a first for the cable industry.

Cable operators landed at #1 in all six U.S. regions surveyed by J.D. Power and Associates — a first for the cable industry, provided WideOpenWest is counted as a cable operator and not as an overbuilder or competitor.

J.D. Power's 2007 Residential Regional Telephone Customer Satisfaction Study looked at six factors in determining overall satisfaction. In order of importance: performance and reliability, customer service, billing, image, cost of service, and offerings and promotions.

Cox Communications dominated this year's survey, nabbing #1 in the Northeast, Southwest and Western regions in the J.D. Power study, which was conducted from April to May and based on responses from 11,911 customers nationwide who receive their local and long distance telephone service from one provider.

Two first-timers in this year's survey landed first place: WideOpenWest, which won top results in the North Central region, and Cablevision, which scored #1 in the Mid-Atlantic region.

Cablevision, creator of the industry-leading $90 ($29.95 each) triple-play bundle—which has been emulated at Time Warner Cable and Comcast—credited the success of its Optimum Voice telephone service as a factor in this year's results.

"Reliability, advanced features and unlimited calling for a flat-rate with no hidden fees have allowed Optimum Voice to attract more than 1.3 million customers, nearly a third of our local phone market," commented John Bickham, Cablevision's president of cable and communications. "Optimum Voice has been enormously popular with consumers, because it has redefined and dramatically improved expectations of what is possible from a phone service."

This year's results indicate the power of cable's bundles, as J.D. Power acknowledged in its press release headline, "Bundling Video with Voice and Data Services Gives Cable Companies A Competitive Edge over Telephone Providers."

The 2007 survey showed 86% of cable-based voice subscribers also subscribing to high-speed Internet services from the same provider—up from 71% in 2006.  Telcos' also increased, with 36% of telecom-based voice subscribers also use their provider to fulfill their broadband service needs, up 7% over 2006.

"The impact of bundling is further evidenced by the boost in importance weight of the offerings and promotions factor, which has increased by 3 percent since the 2006 study," J.D. Power noted in its overview of the results.

"Customers increasingly want multiple services and products bundled into one convenient package under a single provider, and cable companies are doing a great job of achieving this with their voice, data and video packages," said Steve Kirkeby, the firm's executive director of telecommunications and technology research.

"Even still, local and long-distance phone services remain the most widely accepted services to bundle, with data and video steadily closing the gap over the past three years," he added. "While rolling out their video service offerings, telephone companies can improve their near-term competitiveness by either lowering prices on their core products or perhaps even adding wireless service to their bundle options, as some have already done."

The study also found that 43% of customers report that they are loyal to their voice provider—a 2% increase over 2006.  However, among the 12% of subscribers who "definitely" or "probably" intend to switch providers, the most frequently cited reasons for doing so include competitive/discounted pricing, convenience and receiving a single bill.

Additionally, 36% of those who currently bundle said they would add even more products or services from their current provider, which makes "the next several years crucial for both telephone and cable companies," said Kirkeby. "Increased loyalty and the relatively stable switching intentions observed over the past few years will make it increasingly difficult to gain market share through product offerings alone."

The survey's regional results:

Northeast Region: Cox Communications was #1 for a second consecutive year, scoring 717 on a 1,000-point scale. This year, Cox's highest ratings from customers were in the categories of performance and reliability, billing, image and customer service. Time Warner Cable was #2 (698), Cablevision was #3 (693), AT&T was #4 (660), followed closely by Verizon at #5 (659), and Comcast (whose North Central division, including its Boston and MA systems, falls into this region) was #6 (641). The average score was 665 for the region, which includes Connecticut, Massachusetts, Maine, New Hampshire, New York, Rhode Island and Vermont.

Mid-Atlantic Region: Cablevision was #1, scoring 711 overall and "particularly well" in all six factors of overall satisfaction thanks to its New Jersey customers. Cox Communications was #2 (686), AT&T was #3 (664), Verizon was #4 (656), Comcast (whose flagship Eastern division—NJ, PA, DE, MD, VA and Washington, DC—falls into this region) was #5 (637), and Embarq was #6 (611). The average score was 655 for the region, which includes Washington, D.C., Delaware, Maryland, New Jersey, Pennsylvania, Virginia and West Virginia. 

Southeast Region: Bright House Networks was #1 for a second consecutive year, its Florida customers helping it score 713 overall and performing "particularly well" in customer service, billing, image, cost of service, and offerings and promotions. Time Warner Cable was #2 (704), AT&T was #3 (670), Windstream was #4 (666), Verizon was #5 (661), Embarq was #6 (615), and Comcast was #7 (601). The average score was 664 for the region, which includes Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.

North Central Region: WideOpenWest (WOW!) came out on top with #1 overall and #1 in all six factors of overall satisfaction. Cincinnati Bell was #2 (704), Time Warner Cable was #3 (661), AT&T was #4 (650), Verizon was #5 (644), Comcast was #6 (624), Charter Communications was #7 (609), and Embarq was #8 (595). The average score was 649 for the region, which includes Illinois, Indiana, Michigan, Ohio and Wisconsin.

Southwest Region: Cox Communications, with a strong presence in Oklahoma and Kansas, was #1 for a second consecutive year, receiving a score of 703 and  "particularly high" ratings in all factors of overall satisfaction. AT&T was #2 (679), Time Warner Cable was #3 (669), Verizon was #4 (636), and Embarq was #5 (571). The average score was 669 for the region, which includes Arkansas, Kansas, Missouri, Oklahoma and Texas.

West Region: Cox Communications, with systems in California, Nevada and Arizona, was #1 for a fifth consecutive year, this year scoring 691 and performing "particularly well" in billing, image, and performance and reliability. Comcast was #2 (685), Verizon was #3 (664), Qwest was #4 (663), AT&T was #5 (661), and Embarq was #6 (620). The average score was 661 for the region, which includes Arizona, California, Colorado, Iowa, Idaho, Minnesota, Montana, North Dakota, Nebraska, New Mexico, Nevada, Oregon, South Dakota, Utah, Washington and Wyoming.







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